FireEye, Inc. provides cybersecurity solutions that allow organizations to prepare for, prevent, respond to, and remediate cyber-attacks. The company provides vector-specific appliance and cloud-based solutions detect and block known and unknown cyber-attacks. It offers threat detection and prevention solutions, including network security products; email security solutions; endpoint security solutions; and content security products; and security management and orchestration products.
Take a look at the 1-year chart of FireEye (NASDAQ: FEYE) below with added notations:
Over the past two months, FEYE has rallied into a sideways trading range. While in the range, the stock has formed a common pattern known as a rectangle. The pattern has formed a resistance at $16 (red), and a $14.50 support (green). At some point the stock will have to break one of the two levels.
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The Tale of the Tape: FEYE is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $14.50 or on a breakout above $16. The ideal short opportunity would be on a break below $14.50.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach